Market's evolution 06 of July to 10 of July 2015

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Monday, 13 of July 2015

Market's evolution 06 of July to 10 of July 2015

After the resignation of the Greece’s outspoken finance minister Varoufakis and five months of negotiations without reaching agreements, the positions between the Greek government and the Eurogroup began to approach. Finally, a formal request was made to the ESM for financial aid and Tsipras presented a new adjustment program last Thursday, which was discussed this weekend and has been approved this morning after the all-night-talks of the Group.

The proposals submitted by Tsipras were pretty similar to those requested by the creditors of Greece in past negotiations that took place on 26th of June. The proposal consisted of reforms and austerity measures by EUR 13.000 million (vs the EUR 8.000 million required in the previous proposal of the Eurogroup). The rescue requested on Friday would mature on three years and would suppose EUR 53.500 million. We will be aware of the approval of the reforms by the Greek Parliament and how the rescue is carried out.

We are still waiting for news of a determinate interest rate decision in the US. The latest statements published by the FOMC members continued with the trend with the above, reiterating that the inflation target to raise rates is equal to the 2% and that international context will be taken into account.

In China, following recent capital outflows from equities caused that the 40% of the shares from the Shanghai Composite Index halted trading by sharp falls in prices. Finally, the markets jumped at the end of the week after the liquidity injections carried out by the regulators (worth USD 80.000 million).

The equity market went down during the week because of the uncertainty regarding the Greek talks. Government bonds however, did not suffer significant changes since the ECB intervened. At the end of the week, the major European indices went up highlighting the Eurostoxx50 that jumped a +2,53% due to the progress made by the Eurogroup and Greece towards recent talks, whereas in the US, the main indices closed flat. In contrast, in Japan the Nikkei225 index dropped -3,70% closing at 19.779.

With regards to currencies, the EUR was strengthened against the GBP and the USD because of the good progress of the negotiations.

Meanwhile, at the commodities market, the variations of the price of the barrel during the week must be highlighted, which fluctuated between 55 and 60 USD/Brent and closed with a drop of a -2,64% during the week (58 USD the barrel).